Stimulus Payments 2.0: About the CRRSA Act of 2021

The $900 billion Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (CRRSA Act), signed into law on Dec. 27, 2020, delivered a second round of economic stimulus for individuals, families, and businesses.

Stimulus Payments

According to data released by the U.S. Treasury Department, the majority of stimulus payments are already in householders’ bank accounts… up to $600 for eligible individuals, $1,200 for joint taxpayers, and an additional $600 for each dependent child under 17 (e.g., a family with two children could receive $2,400).

‍This second round of stimulus payments ($164 billion), like the first round, IS NOT TAXABLE... nor is it repayable to the government at some later date. And there’s no action required on your part to receive the stimulus money. The IRS is using the most recent information on file – most likely your 2019 tax return or Social Security address – to get the stimulus payment to you either by direct deposit or by check.

Who is Eligible for How Much?

Expect to receive the full entitlement if your adjusted gross income (AGI) is not more than $75,000 ($150,000 if married filing jointly). AGI is gross income like wages, salaries, or interest minus adjustments for deductions like student loan interest or traditional IRA deductions. Folks receiving Social Security retirement, disability, Railroad Retirement, VA, or SSI income and who are not typically required to file a tax return, will again receive a stimulus payment. The IRS will use the information from Form SSA-1099, Form RRB-1099, or the Veterans Administration to generate the stimulus payment.

As AGI increases over $75,000 ($150,000 if married filing jointly), the stimulus amount ratchets down and will completely phase out at $87,000 for single filers with no qualifying dependents ($174,000 if married filing jointly with no dependents).

By the way, this bill expands stimulus payments to include households with different immigration and citizenship statuses not included in the first round; so, retroactively, some individuals ineligible for the first (CARES ACT) stimulus may receive that payment as a recovery rebate credit when filing a 2020 tax return.

The Unemployed Among Us

Unemployment checks will increase by $300 per week, and benefits will extend to March 14, 2021 (unemployment compensation is taxable, tempered by the fact that tax rates drop as income drops). Also extended is the Pandemic Unemployment Assistance (PUA), which expands unemployment to include those not usually eligible for regular unemployment insurance benefits (i.e., self-employed, freelancers, and side-giggers – a hobby, seasonal, or occasional work – will continue to remain eligible for unemployment benefits). Certain workers with at least $5,000 per year in self-employment income but are disqualified from receiving PUA because they also have an employer, could also be eligible for an additional $100 per week in unemployment benefits.

Earned Income Tax Credit & Child Tax Credit

This important provision will help workers who experienced lower 2020 income – or who received unemployment income in lieu of their regular wages – get bigger tax credits and larger refunds in the coming year. It allows lower income individuals to use their earned income from 2019 to determine their Earned Income Tax Credit and the refundable portion of the Child Tax Credit in 2020, since their lower 2020 income might reduce the amount they are eligible for.

The Earned Income Tax Credit is the federal government’s largest program for working people with low to moderate income. Last tax season, over 25 million eligible tax filers received, on average, an Earned Income Tax Credit of $2,476.

Expanded Paycheck Protection Program

Of utmost importance from an employment perspective, the 2021 Act provides a second round of payments under the Paycheck Protection Program (PPP). Self-employed individuals, small businesses, small 501(c)(6) organizations, restaurants, live venues, and Economic Injury Disaster Loans (EIDL) are again eligible. And businesses that continue to experience severe revenue reductions can apply for a second PPP loan.

Businesses with 300 or fewer workers that have experienced 25% revenue loss in any 2020 quarter and small 501(c )(6) organizations that have 150 employees or fewer are eligible for a Paycheck Protection Program under the COVID-19 Emergency Relief Package. And the 2021 Act broadens the type of business expenses forgiven under the loan to include supplier costs, allows business expenses paid utilizing PPP proceeds to be tax deductible, and simplifies the loan forgiveness process.

Extended Student Loan Forbearance

Importantly, both students and parents carrying federal student loans will receive an additional extension on (both principal and interest) loan payments and will not be required to make any payments until April 1, 2021.

Contractor Paid Leave

Contractors temporarily unable to work due to facility closures and other restrictions could receive reimbursement for paid leave from federal agencies.

Eviction Moratorium & Rental Assistance

The CRRSA Act also extends the moratorium on evictions under the CARES Act, which will protect renters from eviction until January 31, 2021… a big boost for struggling families who will receive assistance for paying past due and future rent payments, as well as utility bills. The stimulus package includes $25 billion in emergency rental assistance and extends the deadline to use relief funds set aside in the CARES Act. This assistance is in addition to the stimulus checks of $600 and a 10-week period of $300 in pandemic-related jobless benefits.

Tax Extenders

The CRRSA Act also includes the permanent passage – in some cases, a multi-year extension – of many additional tax provisions commonly referred to as tax extenders, which provide tax relief and support for families and individuals through various mortgage relief, education, and medical expense relief. For example, participants in Flexible Spending Accounts (FSAs) can carry over unused funds from 2020 to 2021 and 2021 to 2022, assuming company plans opt into the new rules.

The 2021 law also has a permanent provision that allows victims of declared disasters to make withdrawals of up to $100,000 of IRA and 401(k) assets until Dec. 31, 2021. Withdrawals from IRA and 401(k) plans will be included in taxable income or can be restored to the account over as long as three years. For those younger than 59½ taking such payouts will not be assessed the 10% penalty on early withdrawals.